UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
MAYOLA A. HENRY,
SURVIVING SPOUSE OF JOHNNIE HENRY
AND HIS SOLE LEGATEE;
COORDINATED CARIBBEAN TRANSPORT;
AMERICAN MOTORISTS INSURANCE COMPANY; and
DIRECTOR, OFFICE OF WORKERS' COMPENSATION
UNITED STATES DEPARTMENT OF LABOR;
Petition for Review of an Order of the Benefits
February 18, 2000
Before JONES and WIENER, Circuit Judges, and
LITTLE, District Judge.(1)
EDITH H. JONES, Circuit Judge:
The issue in this case is whether an agreement
between an injured longshoreman's attorney, the employer, and its insurance
carrier is enforceable where the employee died before a settlement application
conforming to LHWCA regulations was prepared or executed. We affirm the
decision of the Benefits Review Board ("BRB") that no valid settlement
agreement existed pursuant to section 8(i) of the Longshoremen and Harborworkers
Compensation Act, 33 U.S.C. § 908(i) (1994).
Johnnie Henry suffered a severe injury to
his left hand while employed by Caribbean in 1984.(2)
Caribbean, through its insurer, paid his medical care and benefits for
several years. When the benefits payments ceased, Henry filed a claim with
the Benefits Review Board. Caribbean was unsatisfied with the award of
total permanent disability and appealed to this court, while it paid the
required periodic amounts to Henry. The parties stayed the appeal to discuss
settlement, but when no settlement appeared forthcoming, they requested
a briefing schedule from the court. On November 22, 1993, five days after
this request, Caribbean faxed to Henry's counsel an offer to settle the
future compensation and medical claims for $180,000 and attorneys fees
for an additional $20,000. That same day, via facsimile, Henry's attorney
confirmed acceptance of the lump sum settlement offer.
Unbeknownst to Respondents, Henry had died
- of causes unrelated to his hand injury - the day after the settlement
faxes were exchanged. In their ignorance, the Respondents reconfirmed the
settlement on November 29, agreeing to prepare the application required
by Section 8(i) to secure approval by the District Director. The parties
jointly moved for a remand from the Fifth Circuit to the District Director
to complete the settlement.
Henry's attorney notified the respondents
of Henry's death in December and suggested opening a succession and executing
settlement through Henry's son. A week later, Caribbean wrote a letter
to the District Director advising that it intended to withdraw from the
undocumented and unapproved settlement. Countering Respondents' notice
of final payment to the District Director, Henry's attorney moved to enforce
the settlement agreement, relying upon this court's decision in Oceanic
Butler, Inc. v. Nordahl, 842 F.2d 773 (5th Cir. 1988). The Respondents
sought summary disposition of the motion. An ALJ denied Henry's motion.
The BRB affirmed the decision, and Henry's widow has timely appealed to
Henry's widow contends that the BRB erred
in concluding that no enforceable settlement agreement existed with Caribbean
and, alternatively, that the District Director should have required Caribbean
to execute the documents necessary to secure administrative approval of
the settlement. The Department of Labor, siding with Mrs. Henry, further
suggests that if Caribbean were to refuse to participate in preparing a
settlement application, the District Director should authorize Henry's
counsel to do so on behalf of all parties.
These contentions raise legal questions reviewable
by this court de novo. The Department of Labor, however, invokes
rule of judicial deference to administrative authorities(3)
to shield its novel approach to the LHWCA and the regulations governing
compensation settlements thereunder.
Explaining how the settlement in this case
fell short of ordinary procedures attendant to Section 908(i) settlements
goes a long way to justify the BRB's decision. Like many employee compensation
programs, LHWCA requires administrative supervision of the settlement of
claims. Thus, a deputy commissioner or administrative law judge "shall"
approve a settlement within thirty days of its submission unless it is
"inadequate or procured by duress." 33 U.S.C. § 908(i)(1). The employer's
and insurance carrier's liability for benefits shall not be discharged
unless the "application for settlement" is so approved. Id.
Regulations describe how the settlement is
completed. All parties must sign a "settlement application," a "self-sufficient
document which can be evaluated without further reference to the administrative
file." 20 C.F.R. § 702.242(a). The contents of the settlement application
are comprehensively prescribed, as emphasized by the provision's title
- "Information Necessary for a Complete Settlement Application." Id.(4)
The regulations forbid an adjudicator to approve or disapprove a settlement
agreement until a complete application, fulfilling section 702.242, has
been submitted to him. Sections 702.243(a) and (b).
The interest of the employee and administrative
convenience are served by these "paternalistic" regulations. SeeNordahl,
842 F.2d at 781. The prescription of a self-sufficient stipulation, signed
by all parties, enables the employee to know all that he needs to know
about his case, his medical and any disability conditions, and the amounts
of benefits he will receive. It is important for a claimant to be able
to review the relevant information at one time. The Section 8(i) agreement
accomplishes full disclosure for his benefit. Similarly, such a format
facilitates effective, protective review by the adjudicator. The prescribed
settlement application is the sine qua non of the regulations, which
carry out the statutory intent.
Henry never executed a settlement agreement
with Respondents that complied with § 908(i) and the foregoing regulations.
The most that can be said here is that Henry's counsel, acting within his
client's alleged delegated authority, accepted a settlement offer transmitted
by Carribean the day before Henry died. Even if all the information necessary
to complete a settlement application existed in the administrative files,
as Henry's counsel asserts, a reference to the files is insufficient under
the regulations, which require a settlement agreement to be a "self-sufficient
document." More important, of course, is that without Henry's signature,
no fully compliant application could be filed. The Board reasonably relied
upon the comprehensiveness of the procedure provided in the regulations,
and the insufficiency of Henry's counsel's agreement with Caribbean for
compliance purposes, in concluding that no valid and enforceable agreement
According to Mrs. Henry, however, the BRB's
straight-forward logic fails to account for this court's holding in Nordahl,
which held enforceable a settlement application that had been executed
and submitted by the claimant and all other parties but lacked administrative
approval at the time of the employee's death. As the BRB explained, Nordahl
is distinguishable from Henry's case on its facts:
It is undisputed in the instant case that
a formal settlement document was never prepared, that no settlement application
was signed by the parties, and that no settlement application was submitted
for approval in accordance with § 8(i) and the implementing regulations
prior to the employee's death, a meeting of the minds with respect to the
settlement amount notwithstanding."
Henry v. Coordinated Caribbean Transport,
32 B.R.B.S. 29, 31 (1998).
While minimizing this distinction, Mrs. Henry
Nordahl's emphasis on the asymmetric obligations of an employer
(and its insurer) and employee under LHWCA. 842 F.2d at 778. She points
to Nordahl's exposition of a general rule:
Setting aside for the moment the problem exemplified
by the present case (the claimant's death after execution of the settlement
agreement but before approval), the LHWCA's provisions thus require different
analyses of the parties' rights under a settlement agreement. [The claimant's
obligation under the contract cannot become binding without administrative
. . .
The insurer's obligation under the agreement
-- to pay the designated sum in exchange for a release of the liability
that otherwise result under the Act's terms -- is not rendered invalid
by anything in the LHWCA.
Id. at 779. This correct statement
of the structure of LHWCA regarding settlements begs the question critical
to Henry's case, which is, what constitutes a binding settlement. Taken
in full context, Nordahl discusses withdrawal rights only
in terms of a settlement that has been executed pursuant to the regulations
and submitted for administrative approval. See Id. at 779-81.(5)
Nordahl does not support the enforcement of agreements that
have been made in principle among the parties but have not been documented
according to the regulations and lack a self-sufficient settlement agreement
that can fulfill the purposes of administrative review.(6)
If Mrs. Henry's and the Labor Department's
interpretation of Nordahl were correct, a District Director would
require authority to enforce specific performance of improperly documented
settlement agreements, to compel employers and their insurers to participate
in the preparation of settlement applications, and even to allow employees'
counsel unilaterally to prepare, sign, and submit settlement applications.
Indeed, petitioners cite Nordahl -- and only Nordahl - for
the grant of such authority to the District Director. The absence of any
statutory or regulatory mandate for the desired relief is telling. Section
908(i) authorizes a limited role for the adjudicator, requiring him to
approve settlements or applications for settlements unless they are inadequate
or procured by duress. The regulations governing agreed to settlements,
20 C.F.R. §§ 702.241-243, enable an adjudicator to assess the
settlement under the statutory criteria; these regulations contain no standards
for determining when a settlement has been "agreed to" apart from the filing
of a fully-signed application.
That a proper settlement application is the
trigger for administrative approval is evident because, according to the
regulations, the thirty-day approval period is tolled pending receipt of
a complete application. The adjudicator can do nothing to approve or disapprove
settlements under the regulations without a proper application. When antecedent
questions arise concerning the existence or scope of an undocumented settlement
agreement, no enforceable agreement had been reached. Compare Fuller
v. Matson Terminals, 24 B.R.B.S. 252 (1991) (no valid settlement agreement
pursuant to Section 8(i) without a document conforming to the regulations
and signed by the parties) with Nelson v. American Dredging Co.,
143 F.3d 789, 792-93 (3d Cir. 1998) (no enforceable settlement agreement,
where parties only "agreed in principle" and failed to complete §
8(i) stipulation). We may not defer, even under Chevron, to a proposed
administrative interpretation that has no statutory or other support. The
District Director could not enforce an agreement that was not documented
according to the regulations, and he was not empowered to compel the filing
of a § 8(i) settlement application under these circumstances.
The result reached in this case is not unjust
generally or specifically. It comports with the LHWCA and its regulations.
Further, Caribbean paid Henry all the compensation he was owed during his
lifetime; a settlement would only have covered future disability. The BRB
did not err in failing to enforce a settlement unsigned by Henry and noncompliant
with the regulations.
The Board's decision and order are AFFIRMED.
1. District Judge of the
Western District of Louisiana, sitting by designation.
2. As used herein, "Caribbean"
or "Respondents" refers both to Caribbean and its insurer American Motorists
3. Chevron U.S.A., Inc.
V. NRDC, 467 U.S. 837, 104 S.Ct. 2778 (1984).
4. See 20 C.F.R.
(b) The settlement application shall contain
(1) A full description of the terms of the
settlement which clearly indicates, . . . the amounts to be paid for compensation,
medical benefits, . . .
(2) The reason for the settlement, and the
issues which are in dispute, if any.
(3) The claimant's date of birth and, in death
claims, the names and birth dates of all dependents.
(4) Information on whether or not the claimant
is working or is capable of working. This should include, but not be limited
to, a description of the claimant's educational background and work history,
as well as other factors which could impact, either favorably or unfavorably,
on future employability.
(5) A current medical report which fully describes
any injury related impairment as well as any unrelated conditions. This
report shall indicate . . .
(6) A statement explaining how the settlement
amount is considered adequate.
(7) . . . an itemization of the amount paid
for medical expenses by year for the three years prior to the date of the
application. . . .
(8) Information on any collateral source available
for the payment of medical expenses.
5. For instance, the court
This disparity [between the positions of claimant
and employer] leads directly to the general administrative construction
that, absent contrary provisions in the contract,
agreements submitted foradministrative approval
are binding upon the employer or insurer and not subject to rescission
at their election; on the other hand, the agency feels that such submitted
settlements are not binding upon claimants, and are subject to rescission
by them, until approved, because of the statutory asymmetry of treatment.
842 F.2d at 781 (emphasis added).
6. Mrs. Henry also attempts
to rely on the statement in
Nordahl that an employer can protect
itself from the possibility of a claimant's death prior to settlement approval
by inserting appropriate conditional language into the settlement agreement.
842 F.2d at 780, n.6. The BRB responded to this contention definitively:
the employer could hardly have included such language without a formal
agreement in which to place it.